Pacific Rim Officially Files Suit Against Salvadoran Government

Canadian mining company Pacific Rim mining Corp. has officially filed suit against the Salvadoran government in an international trade tribunal. After filing a Notice of Intent of Arbitration (NOI) in December of 2008, the company presented its claim to the International Center for Settlement of Investment Disputes (ICSID) on April 30, 2009.ⁱ The ICSID is one of the five institutions that make up the World Bank and is based in Washington D.C. Its purpose is to arbitrate international trade cases.ⁱⁱ

The basis of Pacific Rim’s case is broken into three parts. The first is the right to file a suit at the ICSID, which is valid due to the fact that both El Salvador and the United States are participating countries in the ICSID. The second part of the company’s case comes from article 10 of CAFTA. Article 10, much like NAFTA’s Chapter 11, aims to protect foreign investment by defending the right of investment to “the expectation of obtaining earnings or utilities…” (Art 10.28). Therefore, government institutions that impede earnings are violating the company’s rights according to CAFTA. The third part of the Pacific Rim case comes from Salvadoran law itself. Due to the fact that Pacific Rim has technically followed all the procedures set out in the inadequate Salvadoran environmental and investment law, the company claims the Salvadoran government has no right to withhold exploitation permits.ⁱⁱⁱ By filing this suit at the ICSID, Pacific Rim attempts to undermine the sovereignty of the Salvadoran state and the people of El Salvador, attempting to invoke international investment law in the company’s favor.

Salvadoran civil society has voiced strong concerns that the ICSID, as an institution, will not present a level playing field in their hearing of these cases. The last ICSID Secretary General, Roberto Dañino Zapata, is currently the Executive Director and Vice-President of Hochschild Mining PLC, a company with mining exploration or exploitation operations in Peru, Argentina, Mexico, Canada, and Chile.^iv The current Secretary General is Meg Kinnear, was until recently a lawyer for the Canadian Trade Law Bureau, a body that counsels the Canadian government on matters of international trade.^v

The Canadian government and mining industry are closely intertwined. As a result of Canada’s legal frameworks, about two-thirds of mining operations worldwide are owned by Canadian companies and about two-thirds of funding for mining companies worldwide comes through the Toronto Stock Exchange. The Government of Canada provides consistent support to the extractive sector, often without assurances to the public that a project will not harm the environment or violate human rights. In some cases, the Canadian government has supported projects after well-documented human rights and/or environmental abuses have been revealed.^vi

Pacific Rim has also shown that it is willing to manipulate trade law to ensure a favorable outcome. This can be seen in the fact that Pacific Rim as a company is based in Vancouver, Canada, but Canada is not included in DR-CAFTA. So, Pacific Rim filed the suit through a subsidiary in Nevada called Pacific Rim Cayman LLC, a subsidiary that has not been active since Pacific Rim sold their only Nevada interest in October 2008.^vii

While there has not been any news released about the status of the case, it is being said that the Funes administration has formed a commission about the issue.

Commerce Group Files Notice of Intent against Salvadoran Government

On the heels of the Pacific Rim NOI and the Presidential election, Commerce Group Corp. and San Sebastian Gold Mines Inc. filed a Notice of Intent to File Claim under DR-CAFTA on March 16^th, 2009 against the government of El Salvador for the “failure to permit mining activities in El Salvador.” Commerce Group and San Sebastian are claiming that by denying the country exploitation permits the Salvadoran government has cost them over $100 million in potential profits. ^viii

Commerce Group is a corporation registered in the state of Wisconsin, and owns a controlling interest in San Sebastian Gold Mines, Inc, a corporation registered in the state of Nevada. The companies began producing gold at the San Sebastian gold mine in 1968 and were awarded the exploitation concession for the mine in 1987. However, in 2006 that license was revoked by the Ministry of the Environment and Natural Resources. Commerce Group claims that their license was revoked “without justification or forewarning.”^ix

Commerce Group stands out as unusual when compared to the other mining exploration companies present in El Salvador.  As of 2004, it was the only international company to directly hold an exploration concession with the Ministry of Economy (rather than through a Salvadoran subsidiary).^x The company maintained operations in the heavily militarized region of Santa Ana through the greater part of the Salvadoran Civil War,^xi and company officials appear to have had close connections to former president Napoleon Duarte.^xii

The Salvadoran Social Movement Responds to Threats

Despite the threats posed by foreign mining companies, the Salvadoran Anti-Mining Movement continues to organize and strategize. They are encouraged by the fact that during his campaign President Mauricio Funes committed to not allowing mining in El Salvador, although since taking office, Funes has yet to make any public statements about mining. The anti-mining movement has been working with FMLN legislators to propose revisions to the current mining laws, so as to restrict mining and provide more protection to affected communities. They have also continued to organize and educate about mining. The first week of June was a week of action about mining where the National Table against Mineral Mining organized information sessions, press conferences and mobilized a march against mining. While the threats from international capital are clear and present, the anti-mining movement continues to grow and educate.

Citizens protest against mining on International Environment Day: June 5, 2009

^ “Pacific Rim Cayman LLC vs Republic of El Salvador.” April 30, 2009. http://www.pacrim-mining.com/i/pdf/2009-04-30-CAFTA.pdf